Corporate Influence on the G20 – By Jens Martens

Corporate lobby groups have created a broad network of influence channels around the G20, with the Business 20 (B20) at its core. At the G20 Sherpa meeting in Frankfurt on 23-24 March the B20 presents its policy recommendations to the governments. Traditionally, the business lobby in the G20 has been pushing for overcoming “overregulation” of the financial industry, strengthening of investor’s rights and broadening of Public-Private Partnerships (PPPs) – measures that prevent, rather than promote, the necessary reorientation of policies towards human right s and sustainable development.

Over the past eight years, the G20 has emerged as one of themost prominent political fora for international cooperation, far beyond its original mandate to tackle the global economic and financial crisis of 2007/2008. Today its agenda covers financial and economic issues, investment (particularly in infrastructure), labour market and employment policy, the opportunities and challenges of digital technology, climate change, development, agriculture, global health, migration, counter-terrorism, and other issues of global significance.

For transnational corporations and their national and international associations and lobby groups, the G20 process provides important opportunities to engage with the world’s most powerful governments on a regular basis, shape their discourse, and influence their decisions. For this purpose, business actors have created a broad network of alliances and fora around the G20, with the Business20 (B20) as the most visible symbol of corporate engagement.

It is difficult to measure the direct influence of business actors on the G20 and to assess their impact. Given the lack of transparency and disclosure of the G20, systematic information about its meetings is not publicly available.

The B20 and the International Chamber of Commerce (ICC) claim success in influencing G20 decision-making in various impact reports and G20 Business Scorecards, leading to the conclusion that the G20 is increasingly responsive to the priority recommendations put forward by them.

However, it is not clear whether the commonalities of business and G20 positions have been caused by direct B20 interventions, by the lobbying of national business groups in G20 countries, by longer-term methods of influencing discourses and political decision-making processes (including public relations campaigns and scientific research commissioned by corporate interest groups), or simply because governments share certain views and analyses of business actors. Whatever the case, the comparison of business recommendations and G20 communiqués shows a large proportion of overlapping positions and common language. This indicates the high degree of direct or indirect influence that corporate actors exert on shaping the agenda and the discourse of the G20.

Key messages of business actors to the G20 – and what’s wrong with them

In listening to the key catchwords of corporate actors in their recommendations to the G20, such as encouraging innovation, optimizing regulation, or developing effective and efficient governance, one may wonder “what’s the problem?” But a closer look behind the flowery language reveals that corporate engagement in and influence on the G20 discourse entail considerable risks and side-effects. The following aspects are of particular concern:

Obsession with economic growth at the expense of the environment: The B20 and the ICC have constantly been preaching economic growth as a panacea and a sine qua non condition for prosperity and development. But there is ample proof to suggest that growth cannot simply be equated with prosperity and sustainability. On the contrary, in recent decades, economic growth has been accompanied by growing inequality and environmental degradation in most countries around the world. The B20 follows a “more of the same” approach that is in sharp contrast to more sophisticated concepts of

Push for deregulation: Transnational banks, investment firms and their lobby groups worked hard to weaken regulations intended to help lessen the risk of another financial crisis. At G20 level, business representatives recommended that the G20 leaders “pause”, criticized “inefficient regulation and overregulation of business”, and called on the G20 to “optimize” and “re-evaluate” post-crisis financial regulation. Their interventions prepare the ground for the next global financial crisis.

Promotion of investor interests: Calls for trade liberalization, open investment markets, and the elimination of all forms of protectionist measures have been always core demands of the B20 and the ICC to the G20. They call on governments to create or strengthen investment protection and promotion agreements and insist that these agreements must include strong investor-state dispute settlement (ISDS) provisions giving transnational corporations the right to sue host governments for alleged discriminatory practices. The ICC itself is one of the leading international institutions that provide dispute settlement services. But the ISDS provisions potentially restrict the policy space of governments to pass legislation addressing public health, environmental protection, and labour rights. They give priority to investors’ rights over human rights.

Promotion of Public-Private Partnerships (PPPs) and private finance of public infrastructure: Business actors promote PPPs as a particularly promising model to fill the global funding gap in infrastructure and ask Multilateral Development Banks and G20 member nations to develop bankable PPPs with well-balanced risk allocation and adequate long-term investor protection. But what the B20 actually means by “well-balanced risk allocation” in fact seems to entail minimizing the risk for the private investor by maximizing it for the public partner. Many studies have shown that PPPs involve disproportionate risks and costs for the public sector. They can even exacerbate inequalities and decrease equitable access to infrastructure services.

Preferential treatment for the business lobby in global governance: While business actors have constantly enjoyed preferential treatment by the G20 and far better access to its deliberations and decision-making processes than civil society organizations and trade unions, they continue to insist on a more formalized relationship. The ICC stated for instance in December 2016 that among the longstanding recommendations by business to the G20 were calls for establishing formal business representation in the G20 energy-related working groups.

Time to counterbalance corporate influence in the G20

The Enhanced Structural Reform Agenda adopted at the 2016 G20 Summit in China is a good example of the corporate influence on the G20. It reflects a narrow and purely economic understanding of the need for structural change. This is in sharp contrast to the holistic approach of the 2030 Agenda for Sustainable Development, adopted by the United Nations (UN) in September 2015. While the 2030 Agenda posits the need for an integrated and indivisible approach to balance the economic, social and environmental dimensions of sustainability, the Enhanced Structural Reform Agenda of the G20 mentions social and environmental concerns only in passing and completely ignores human rights as guiding principle for any structural reform.

In order to at least gradually overcome the described imbalances in G20 policies and the double standards in its openness towards business and civil society, substantial reforms are necessary. They relate to procedural as well as to political aspects of the G20 process.

Enhancing transparency and disclosure: The discussions and decision-making processes in the G20 proceed largely behind closed doors. In order to overcome the lack of transparency and comprehend its decision-making processes, the G20 should disclose fully and timely all documents related to its meetings, including Sherpa, working group, and ministerial meetings.

Providing equal access to all engagement groups instead of preferential treatment for business: In order to demonstrate its openness towards social groups, the G20 has set up various Engagement Groups. But business actors have constantly enjoyed better access to G20 decision-makers. While the space for civil society organizations has been shrinking in several G20 countries and inter-governmental fora, the space for corporate interest groups has been widening. The G20 should elaborate clear and consistent standards for engagement with non-state actors that allow for systematic participation of civil society organizations in its discussions while preventing undue influence of corporate interest groups. All forms of preferential treatment for business groups in the G20 process should be stopped.

Taking policy coherence for sustainable development seriously: At UN level, G20 Governments formally agreed on a comprehensive set of sustainability principles and human rights. But at G20 level, they failed to effectively bring their policies into line with them. Instead of subordinating their policies to the overarching goal of maximizing GDP growth, the leitmotif of their policies should be that of maximizing the well-being of the people without compromising the well-being of future generations by respecting the planetary boundaries. In order to translate this leitmotif into practical policy, G20 Governments should adopt binding commitments to policy coherence for sustainable development. Specifically, financial, economic and trade policies should be coherent with sustainable development policies. Responsiveness of G20 member nations to the principles and goals of the 2030 Agenda for Sustainable Development of the UN should be assessed systematically.

Strengthening public policies instead of investors’ rights: In G20 discussions, corporate lobby groups have been advocating forcefully against “overregulation,” and for exactly those trade, investment and financial rules that have tended to destabilize the global economy and exacerbate inequalities in both the global North and the global South. The G20 should fundamentally rethink its approach towards trade and investment liberalization and take into account the demands of civil society organizations, trade unions, indigenous peoples, human rights experts, and many others, to place human rights and the principles of sustainable development at the core of all trade and investment agreements.

Rethinking PPPs in the G20 process: Business actors and corporate think tanks have been steadily promoting PPPs as the primary model to fill the global funding gap in infrastructure investment. However, many studies have shown that PPPs often involve risks to the public sector and can even exacerbate inequalities and decrease equitable access to infrastructure services. The G20 should take these findings and concerns into account, rethink its approach towards private sector participation in infrastructure investment, and explore alternative means of public infrastructure financing. Where long-term institutional investors are involved in financing infrastructure, the G20 High Level Principles guiding their activities should be revised to promote coherence with social and environmental goals.

Recalibrating the role of the G20 in global governance – reclaiming democratic multilateralism: The measures listed above are indispensable to counteracting the influence of corporate interests on discourse and policies in the G20. But these measures are not ends in themselves. There is a need to reconsider the current mainstream approach based on “club” governance and “partnerships” among diverse “stakeholders”. Creating consistent standards for transparency, the engagement with non-state actors, and policy coherence should not lead to the further strengthening of the G20. Rather than continuing to outsource tasks to clubs with limited membership and piecemeal partnerships with decision-making structures outside the UN, G20 Governments should enable the UN to be the leader in the establishment of democratic global governance and subordinate the G20 to it.

Jens Martens is Executive Director of Global Policy Forum

Further information

Jens Martens (2017): Corporate influence on the G20. The case of the B20 and transnational business networks. Berlin/Bonn/New York: Global Policy Forum and Heinrich-Böll-Stiftung.